The $31 million Diavik wind farm project in Canada’s Northwest Territories is projected to lower the mine’s annual power-related diesel fuel requirement by 10 per cent and reduce its carbon footprint by six per cent. As well, it will reduce Diavik’s seasonal winter road fuel haul by approximately 100 loads

Over 250 delegates from five continents attended the Renewable Energy and Mining Summit in downtown Toronto September 25 and 26. The summit brought together mining industry people who are responsible for procurement and planning of energy services with representatives from the renewable energy sector who develop energy projects.

The gathering was a bit like an engagement party for an arranged marriage with those present burdened with apprehension about whether or not the prospective bride (renewable developers) and groom (mining sector) could actually get on with each other. Bay Street financial analysts and investment companies assumed the roles of ‘the parents’ nervously overlooking proceedings.

In fact, the summit was all about business, the business of supplying energy to mine operators at lower costs than at present. It was also about exploring the potential for a new, non-utility market for the renewables sector.

Those representing the mining ‘side of the family’ on the various discussion panels seemed quite open to the idea that over the past two decades, renewable energy technologies have improved substantially such that many of the former criticisms about them are now untrue.

They are no longer that expensive, their reliability has improved significantly and the technologies have been proven at various scales and in diverse environments.

The miners were looking for energy with lower cost and lower price volatility, irrespective of the source – renewable or non-renewable. Hybrid energy solutions such as wind-diesel or mine micro-grid solutions (renewable + conventional + storage) were reported to offer opportunities.

There seemed to be some consensus developed at the summit that for offgrid mines the levellized generation costs from renewables could be appreciably lower than the cost of electric power generated from liquid fuels, and could offer a more reliable electricity supply.

The other side of the family, the ‘renew crew,’ seemed to not quite grasp or couldn’t quite accept the miners’ statements that capital is very, very tight across the mining industry at present, and thus, the number of mine owner-operator opportunities for the renew-crew was potentially modest.

Enter the energy services companies with offers to facilitate the bringing together of the parties with buy, lease, lease back, rent, or even $/kWh supply contracts matched to mine lives, rather than the conventional 20 to 25-year lives of their equipment.

However, the wedding was nearly called off completely when someone on the bride’s side suggested that their financial backers may view a longish-term contract with a mining company as something less than an asset.

Although wind energy and solar energy are approaching, or have beaten, grid parity at certain locations with good natural resources, the discounted costs of electricity produced from renewable energy technologies are still capital dominated, in contrast to conventional technologies where the cost of fuel dominates.

Several participants at the summit pointed out that by working together, mining operators and renewable developers should be able to realize appreciable value in the renewable energy supply chain so that capital costs can be significantly diminished.

Liezl Van Wyk of Rio Tinto illustrated this point beautifully with her presentation about the $31 million Diavik Wind Farm project.

As many of the engineering design and construction skills required to bring off renewable projects successfully already exist within mining operators’ facilities, capital costs can be saved by doing some of the work ‘in-house’.

Ian Nelson of Energia Llaima and Hans Grydehøj of Sunmark reported on a solar electrolyte heating system supported by Codelco in an electrowinning plant in Chile. Together, they designed, constructed, operate, maintain and own the 39,300 m2 flat panel solar heating plant for which they receive a fixed $/MWhth amount for energy supplied over 10 years. Energy procurement risk is substantially reduced for the mine operator with this type of deal.

Thermal-to-electricity

Kevin Smith of SolarReserve also impressed with a concentrating solar thermal-to-electricity system that could operate with a sustained output for 20 hours each day with use of a heat store for “low teens” of cents/kWh. The quiet heroes of the summit were the team from Rame Energy Ltd. (http://www.rame-energy.com/). It was this Plymouth-based, UK SME that had big enough cojones to design, construct and commission the mining industry’s first three utility scale wind cluster projects at Veladera (2007), El Toqui (2010) and Punta Colorada (2011). Today, at over 4,100 metres above sea level, Veladera remains the world’s highest wind turbine.

Renewable energy

Last time I looked in my renewable energy textbooks, hydroelectric power plants were classified as a form of renewable energy and the number of mining companies investing directly in the construction of hydroelectric plants to support their operations is appreciable. So the idea that renewable energy and mining can marry for mutual benefit is not a new one at all. Payback times for hydroelectric plant are long, IRRs are low and NPV/CAPEX ratios are low too, demonstrating the importance of resilience to electricity price volatility to mining companies. However, what was apparent from this summit was that new technologies are emerging that offer similar benefit with potentially improved financials and that more imagination is being used to think about the financing of these projects.

Dean Millar is MIRARCO Research Chair of Energy in Mining, Bharti School of Engineering, Laurentian University.

]]>Offshore wind and solar power: wacky or inevitable?http://www.sudburyminingsolutions.com/offshore-wind-and-solar-power-wacky-or-inevitable.html
http://www.sudburyminingsolutions.com/offshore-wind-and-solar-power-wacky-or-inevitable.html#respondThu, 01 Sep 2011 00:00:47 +0000http://beta.sudburyminingsolutions.com/?p=1513Professor Dean Millar, MIRARCO research chair for energy in mining, is a voice in the wilderness working away on what some would consider wacky alternative energy schemes for an industry with a voracious appetite for conventionally generated power. A former program director for renewable energy and senior lecturer at the Camborne School of Mines in the U.K., Millar is a classic iconoclast, challenging traditional thinking and daring us to explore new paradigms.The buzz surrounding the planned development of a world-class chromite deposit by Cliffs Natural Resources and a nickel-PGE discovery by Noront Resources in the McFaulds Lake area of Ontario’s Ring of Fire provide Millar with an ideal test case. These two proposed mines are located in the far north of Ontario some 300 kilometres from the nearest road or rail line and will have to rely exclusively on expensive diesel fuel until the area is connected to the province’s power grid.

Offshore wind or solar power as part of an integrated power solution including diesel, Millar told delegates at the 5th Mining and Environment International Conference in Sudbury this summer, could save these mines millions of dollars. At some point, a grid connection would probably make sense for McFaulds Lake, but for even more remote mines like ArcelorMittal’s Mary River iron ore project on Baffin Island in Canada’s Arctic, or Vale’s Voisey’s Bay Mine in northern Labrador, getting electricity from a grid will probably never happen.

The world’s hunger for iron ore and base metals is forcing mining companies to build mines in the most remote regions of the Earth at the same time that jurisdictions like Australia are proposing carbon taxes, scientists like Sudbury’s own David Pearson are warning about climate change (see Page 14) and nuclear power is looking more and more dicey as a result of the Fukushima disaster in Japan.

Mines in the not too distant future will have to rely more and more on the “wacky” alternative energy solutions like offshore wind and solar power espoused by Millar and his PhD student, Kim Trapani (see Page 16 and 18), but in 25 years, as alternative energy technologies mature, chances are we won’t consider them wacky at all.

The photographs illustrating our stories on offshore wind and solar power in this issue of Sudbury Mining Solutions Journal offer us a glimpse of what the future will look like. The Robin Rigg Wind Farm off the coast of Scotland supplies180 MW of electricity – enough to power 117,000 homes, while in California’s Napa Valley, SPG Solar supplies wineries with floating solar arrays to free valuable agricultural land for growing grapes.

The mining industry has taken cheap, conventional sources of power for granted for too long. It’s time to get creative and pay attention to new alternative energy technologies in anticipation of a future that’s looking more and more inevitable.